Hey Global Investor, here’s what you need to know before the US markets open.
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đ„ Thermo Fisher: Sizzling Hot Expansion?
Thermo Fisher Scientific (TMO) announced that it would acquire PPD Inc. (PPD), a clinical research services provider, for $17.4B, after two acquisitions in 2021 already. (Tweet This)
Background
Thermo Fisher Scientific, Inc. is the worldâs largest manufacturer of scientific instruments, consumables, and chemicals, among others. The company was founded in 1956 and went public in 2014. Thermo Fisher caters to many clients in hospitals, clinical labs, biotech, and pharmaceutical companies. As of 2021, the company has made 59 acquisitions and operates a global workforce of 80K, with a market value of $194.3B.
Thermo Fisher has a solid track record of profitability and beating analyst estimates. The company brought in $32.22B in revenue last year, up 26% Y-o-Y. Analysts predict that the company will top estimates once again when it announces quarterly results.
The reason behind Thermo Fisherâs success is its ability to innovate and double down on expansion consistently. The company recently acquired two biotechnology companies Henogen, and Messa Biotech, for over $1B. By acquiring PPD, Thermo Fisher will strengthen its pharmaceutical arm.
What Happened
PPD specializes in the drug development process through preclinical consulting, designing, and conducting clinical trials. The company, which went public last year, oversaw the Covid-19 trial sites of Moderna Inc (MRNA). The acquisition will be completed this year and enable the company to offer new and improved services for customers while increasing efficiency and cutting costs in the drug development process.
While Thermo Fisher gets access to PPDâs drug development platforms, PPD is likely to acquire more contracts as the pandemic increases the need for crucial suppliers for drugmakers. The demand for Contract Research Organizations (CRO) has bounced back after clinical trials were disrupted due to the pandemic. The increase in private and government spendings to discover new treatments is yet another impetus for this acquisition.
Separately, Thermo Fisher will invest $600M to expand its bioprocessing production capabilities. The investment will double the current manufacturing capacity with 11 new sites in the US and create 1.5k more jobs.
All seems well for now, but moving too fast can catch the eye of the tiger hiding in the bushes since the regulatory bodies are always on the prowl. Even so, the investors seem to have green-lighted the deal already!
Market Reaction
TMO closed the day at $494.38, up 3.42%. PPD also ended the day in the green at $45.80, up 6.51%.
Company Snapshot đ
TMO $494.38 +16.34Â (+3.42%)
Analyst Ratings (23 Analysts) BUY 83%Â Â HOLD 17% Â SELL 0%
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Later Today đ
- Before Markets Open: Morgan Stanley Earnings (MS)
- Before Markets Open:Â Bank of New York Mellon Corp Earnings (BK)
- 6:00 PM IST: Housing starts (SAAR)
Fun Fact of The Day đ
Glaciers and ice sheets hold about 69% of the world’s freshwater
